Daily Rate Update: May 4th-8th

This morning, the Bureau of Labor Statistics reported the worst Non-Farm Payrolls report in U.S. history for April. Non-Farm Payrolls showed 20.5 million Americans lost their jobs last month while the Unemployment Rate soared to 14.7% with losses seen across all sectors of the labor market. The U6 number, or total unemployed soared to 22.8% – meaning that literally 1 in 5 people are without a job and want one.

Fannie Mae reports that its Home Purchase Sentiment Index (HPSI) fell 17.8 points in April to 63.0, its lowest reading since November 2011. More consumers reported that their household income is significantly lower today than it was 12 months ago. Doug Duncan, Senior Vice President and Chief Economist said, “While consumers did grow more pessimistic in April about whether it’s a good time to buy a home, low mortgage rates remain a driver of purchase optimism. We expect that the much steeper decline in selling sentiment relative to buying sentiment will soften downward pressure on home prices.”

Coronavirus update from Johns Hopkins as of this morning: Here in the U.S., there are 1,256,972 cases of the virus with 75,670 total deaths while 195,036 have recovered. There are 3,866,642 cases of the virus reported worldwide, 270,118 deaths while 1,293,333 have recovered from the virus.

The unemployment line continues to grow. Over 33 million people are now unemployed across the nation in the past seven weeks due to the pandemic induced shutdown of the U.S. economy. For the week ended May 2, 3.17 million Americans filed for first-time unemployment benefits, worse than expectations of 3.0 million. The worst of new claims could be in the rear-view mirror and has been declining since the 6.87 million record for the week ended March 28. The four-week moving average, which irons out seasonal abnormalities came in at 4,173,500 down 861,500.

Mortgage rates remained near record lows this week due in part to the global pandemic outbreak. Freddie Mac reports that the 30-year fixed-rate mortgage inched higher to 3.26% this week with 0.7 in points and fees. It is just above last week’s all-time low of 3.23% which was the lowest rate since record-keeping began in 1971. Freddie Mac said mortgage rates stayed at or near record lows for the fifth straight week and homeowners are taking advantage with refinance activity remaining high. Although purchase demand declined 35% year-over-year in mid-April, demand has improved modestly over the last three weeks. A year ago the rate was 4.14%.

Mortgage rates continued to hit fresh all-time lows in the latest week in the wake of the pandemic fallout. The Mortgage Bankers Association (MBA) reports that the 30-year fixed-rate mortgage fell to a survey low of 3.40% with 0.30 in points for the week ended May 1, 2020. The MBA’s Market Composite Index, a measure of total mortgage loan application volume, was unchanged. The Refinance Index fell 2% while the Purchase Index rose 6%.

The U.S. job market continued to give off negative numbers that have never been seen in the history of the United States.
ADP Private Payrolls showed a massive 20.236 million jobs lost in April as the pandemic induced shutdown destroyed the labor market in April. Estimates were calling for 20 million private jobs lost with this being the worst ADP report in its history. CNBC reports that the previous record was 834,665 jobs lost in February 2009 at the height of the Great Recession. April’s job losses are more than double all the private jobs lost during the Great Recession period.

CoreLogic reports that home prices nationwide, including distressed sales, rose 4.5% from March 2019 to March 2020. On a monthly basis, prices were up 1.3%. CoreLogic’s Chief Economist Dr. Frank Nothaft said,“Home prices for March reflect transactions negotiated primarily in the previous two months, prior to the implementation of the shelter-in-place policies. This economic environment will further impact the housing market into the foreseeable future.” From March 2020 to March 2021 prices are only expected to rise by 0.5%.

The coronavirus fallout has impacted the number of house listings for sale in a big way in April as owners held back on inviting potential buyers into their homes. Realtor.com reports that the number of homes that went on sale last month plunged 44.1.% from April 2019, according to its Monthly Housing Trends Report. Realtor.com Chief Economist Danielle Hale said in a statement. “Although we saw sharp drops in new listings, an increase in the time it takes to sell a home, and a flattening of prices in April, May is likely to see some of these metrics worsen.”

The easing of lockdowns across the U.S. continues this week which should boost the economy in the coming months. California, the first state to shut down its economy, will begin to reopen this Friday as Governor Newsom has said he is confident that the virus outbreak reached a peak. European nations are slowly lifting shutdown orders. The hopes of a global economic recovery are boosting future demand prospects for oil as prices gush higher. WTI oil is at $23.19/barrel, +$2.77.

U.S. stocks are following the ‘Sell in May and go away’ mantra on this just the second day of trading for the month. The Dow Jones Industrial Average has fallen nearly 1,000 points on Friday and Monday after the record numbers in April. Deteriorating U.S.-China relations along with headlines that Berkshire Hathaway shed its airline’s holdings are pushing U.S. stocks lower to begin the week. Warren Buffet sold his holdings in the airline sector saying the industry has fundamentally changed due to the coronavirus outbreak. The White House continues to suggest that new tariffs will be placed on China for its handling and the origin of the coronavirus.

Several key labor market reports will be released this week for the month of April with the numbers being severely impacted by the coronavirus pandemic. The ADP Private Payrolls report will be released on Wednesday followed by the government’s Jobs Report on Friday. At the moment, forecasts are for 21 million job losses in April with the unemployment rate coming in over 16%. In the past six weeks, 30 million Americans have filed for first-time unemployment benefits with still many more to come in the next few weeks.